BROOKFIELD ASSET MANAGEMENT LTD Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Cherilyn Radbourne - TD Cowen - Analyst : Connor, I wanted to pick on the prospect for alternatives to gain access to the broader retirement market. I think there's been a lot of emphasis placed on distribution and shelf space thus far. But in the letter, you comment that ultimately you think the product offering will be the key determinant of success. Can you elaborate on that a bit more and comment on timing as well? Connor Teskey - BROOKFIELD ASSET MANAGEMENT LTD - President, Brookfield Asset Management; Chief Executive Officer, Renewable Power & Transition Thank you for the question. You are absolutely correct. This is a major and significant growth opportunity for our business, we feel it will grow incrementally over the next several years and decades. But you're right, there's two things of note. One, success in this space is going to be driven by those with the brands, the scale and the track record. And in this regard, we feel we're second to none. And then secondly, we feel the winners are going to be determined by who has the right products to meet the needs of these investors and these new pools of capital. And here, our leadership in the right asset classes, notably real assets across infrastructure, power, real estate in asset classes that have long duration inflation-protected cash flows, which within the alternative space, absolutely make the most sense for retirement products. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2025 / 2:00PM, BAM.N - Q2 2025 BROOKFIELD ASSET MANAGEMENT LTD Earnings Call So at this point, our focus is utilizing our leadership in these key sectors to provide the right products across the right asset classes as this opportunity evolves, and we have every intention to be a leader in the space as the opportunity grows.

Question: Alexander Blostein - Goldman Sachs Group Inc - Analyst : I was hoping we can spend a couple of minutes on insurance. Obviously, an important growth area for the firm. Two parts question there, I guess, number one, we've seen generally increased competition in tighter credit spreads in the US retail channel. How are you guys thinking about both growth in the US retail with respect on that $20-ish billion target you've talked about in the past, and the ability to ultimately pivot and rotate more assets into Brookfield Strategies. And then secondly, I was hoping you could also hit on the Just acquisition and just kind of thinking what kind of footprint and the ambitions you might have in the UK market on the back of that deal? Connor Teskey - BROOKFIELD ASSET MANAGEMENT LTD - President, Brookfield Asset Management; Chief Executive Officer, Renewable Power & Transition Thanks, Alex. Maybe taking that all together, in terms of the Just Group transaction, for everyone's benefit, Brookfield Wealth Solutions last week announced an agreement to acquire Just Group, a leader in provider of UK retirement products. If this transaction is successful in closing, we could expect to manage a significant portion of Just's $35 billion-plus portfolio under our existing IMA

Question: Kenneth Worthington - JPMorgan Chase & Co - Analyst : I wanted to follow up on Cherilyn's retirement question. You highlighted the 401(k) opportunity, specifically in your shareholder letter and the prepared remarks as part of that retirement opportunity. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2025 / 2:00PM, BAM.N - Q2 2025 BROOKFIELD ASSET MANAGEMENT LTD Earnings Call Is the 401 channel something specifically that Brookfield wants to pursue? And if so, what is your approach to pursuing this? There seems to be a lot of different angles that one could take, whether it's target date funds, adviser managed accounts, record keepers. So how are you thinking about it if, in fact, you are going to go after that channel? And if so, is partnership something that you feel is important to success here? Connor Teskey - BROOKFIELD ASSET MANAGEMENT LTD - President, Brookfield Asset Management; Chief Executive Officer, Renewable Power & Transition We'll be clear. We absolutely expect to go after this opportunity. And at this point, we would look to do so across all channels. Piggybacking on the previous question and our comments in the script and on the letter, we believe the most important thing for success here is having the right products. And that is where we are focused. And right now, the environment and the objectives of what people are trying to meet continues to remain fluid. And our view is, given our leadership in the right time, right types of alternatives to put into these new accounts, as well as the products that we can create, give the breadth and depth of our platform, we should be extremely well positioned. There have been some partnerships announced in the space, and that's great. It shows a very constructive direction of travel for more alternatives going into these pools of capital. But we feel that this is going to be an opportunity that is created over an extended period of time, several years and decades. And none of those partnerships to the best of our knowledge, are exclusive. And we feel that we have the best products, and the right leadership vision, we'll be well positioned to capture this opportunity in the years to come.

Question: Brian Bedell - Deutsche Bank AG - Analyst : Great, thanks for taking my question. Maybe one for Hadley, to switch gears a little bit to the expense outlook. Good to see the expense control and margin improving. If you can comment on, whether you think this, I think we're about 10% year-over-year expense growth pace [success], if you also see that continuing in the back half of the year and then how you see the FRE margin expanding into next year, whether we can get the 60% level at some point? I know that might be a little bit futuristic. And then also acquiring the additional stakes in the partnerships, I think that was about a $250 million FRE upside potential that you outlined in the Investor Day last year. Where are we on that path? And I think Angel Oak is incremental to that $250 million, if you can confirm that? Hadley Marshall - BROOKFIELD ASSET MANAGEMENT LTD - Chief Financial Officer, Brookfield Asset Management; Managing Partner, Infrastructure So these are good questions. On the margin front and on our cost that 10%. It does include a little bit of build. As you know, we've been in building mode around different areas, accessing the retail channel as the example on the fundraising front, our credit platform as we grow our renewable strategy. And so you're seeing that operating leverage that's built into the business pay off on the margin front. So we are 1%. And so that does make a difference. The margins are also impacted by the mix of our businesses. So as an example, when we acquire more of our partner managers at very attractive levels, but when we do acquire them, they generally come at low margins. And we're also in a cycle where our opportunistic business is returning on a relative basis, a significant amount of capital why they built into their deployment. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2025 / 2:00PM, BAM.N - Q2 2025 BROOKFIELD ASSET MANAGEMENT LTD Earnings Call So when getting to your question around the rest of the year and just kind of overall long term, we see expenses around that 10% level as we continue to do a little bit of building but a steady state kind of as we move forward and meeting our long-term goals from that perspective. So that's critical for the business as we look out over the five years. On your second question related to the $250 million attached to the FRE that we have options against with our partner managers you're right, Angela Oak did not exist at that time, so that was not included in that. And we're just really in the early part of that because we bought a small portion of Oaktree 1.5%. We bought a little bit more Primary Wave that takes us to about 44%. So there's a lot more attached to that, that can generate additional FRE growth, again, at very attractive multiples.

Question: Mario Saric - Scotiabank GBM - Analyst : I want to come back to the individual allocation, seeing the amortization of alternatives as you put it. How do you see the ramp-up in that demand relative to the ramp-up that you saw with respect to institutional allocations write into alts over the past 5, 10, 15 years in terms of timing? And then the second part of the question would be how much of this opportunity would you say is already embedded in your five year Investor Day forecast as it pertains to the 16% to 17% fee bearing capital and fee related UK guard (inaudible) came that you laid out last weekend? Connor Teskey - BROOKFIELD ASSET MANAGEMENT LTD - President, Brookfield Asset Management; Chief Executive Officer, Renewable Power & Transition Thanks, Mario. The opportunity for increased allocation to alternatives from what we will call individual investors. Again, we will reiterate, we view it as incredibly significant, perhaps matching and exceeding in size over the long term, what is available from institutional investors, but it will take time. This will grow incrementally over years and decades to come. The actual process of including these still needs to -- the regulations to be adjusted, the products need to be formed. It is a very large opportunity, but it is an incremental one in the early years that expands into a very significant one in later years. The other point in context of your question is it's important to recognize that institutional allocations to alternatives are still going up. We do not see that slowing down anytime soon, at any point in kind of our short or medium-term plans. So in terms of comparing the individual to the institutional, it's tough to do those at this point. But only to say, we see the retail growing incrementally at first and then scaling very rapidly in the future. And then on the institutional side, we still see increasing demand there.

Question: Jamie Goin - NBF - Analyst : Just wanted to get a sense with the Just acquisition and more broadly what are the requirements and then time lines to be able to shift some of these large fee rate assets that are managed currently in-house by Just or others into the ban private funds to enhance yields above the standard IMA fee rates? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2025 / 2:00PM, BAM.N - Q2 2025 BROOKFIELD ASSET MANAGEMENT LTD Earnings Call Connor Teskey - BROOKFIELD ASSET MANAGEMENT LTD - President, Brookfield Asset Management; Chief Executive Officer, Renewable Power & Transition Thanks, Jamie, and to you as well, welcome to the call, whenever BWS does a transaction such as Just Group, obviously, the transaction needs to be closed, it needs regulatory approval. And then such shifts need to be agreed and approved by a regulator. And in the situation of Just as any of the other similar transactions we've done in the past. So we would expect that process to take place at some point in 2026. In terms of the opportunity to then increased allocation to private funds, if that is indeed approved by the regulator as we are seeing in our other insurance portfolios. At that point, it becomes an incremental process over time. We have a little bit of a denominator in trying to measure that because the base of assets keep growing up. The amount that we've been transferring into our private funds continues to be at a low percentage, but we are seeing that increase. And I would say any time we acquire a new portfolio, it's generally a period of somewhere between two to five years to make that shift.

Question: Dean Wilkinson - CIBC World Markets Corp - Analyst : Just a quick question around the base shelf that was filed last night. Given your current financial position and liquidity, could we perhaps read into that document that there are acquisition opportunities that may come to the forefront over the next 12 months or so that could be additive to your fee-bearing capital that perhaps we haven't considered at this point? Hadley Marshall - BROOKFIELD ASSET MANAGEMENT LTD - Chief Financial Officer, Brookfield Asset Management; Managing Partner, Infrastructure Yeah. I mean I would say that our focus really is around making sure we can generate the liquidity in order to support the business. So we've got $1.5 billion as of the quarter end. And so we're in a very strong position, but we'll continue accessing the bond market in order to support the growth of our business because, we still have a lot of opportunities on the partner managers, which we talked about, the $250 million of FRE and then of course, seeding additional strategies. We've had such strong success with our complementary strategies, and we see a lot more on the product launch side as well as just newer initiatives that we're looking at. So from that standpoint, that is what you're really seeing in that shelf. In terms of acquisitions, we're always opportunistic, but there's nothing that we need to do, and so it really is just an opportunistic play from that perspective.

Question: Vikram Gandhi - HSBC Securities (USA) Inc - Analyst : I've got a two-parter, perhaps starting with the changes incorporated in the big, beautiful build. I wondered if you could share your thoughts on how these changes around tax breaks for renewable projects could possibly maybe back your deployment and exits in that area? Connor Teskey - BROOKFIELD ASSET MANAGEMENT LTD - President, Brookfield Asset Management; Chief Executive Officer, Renewable Power & Transition So in terms of our renewable business, there's three points that we would make. One, our renewable strategy, at this point, we are confident that we can safe harbor or secure the legacy tax credit treatment for the entirety of our advanced stage US renewables pipeline, that would be point one. Two, well, the changes in the one big beautiful bill did lead to an accelerated retirement of those tax credits, it does leave a window for those product jets that are already either under construction or start construction in the next 12 months to receive the legacy tax treatment. And we feel that opportunity lends itself best to the largest platforms that have access to capital and centralized procurement programs to get those advanced stage projects started, and we're certainly the leader in the space. And then the third thing I would say beyond our renewables business, we do reap tax credits across a number of investments we have at Brookfield, but some of our advanced manufacturing, nuclear, hydro, batteries, all of that was well protected under the bill. And therefore, we are certainly one of the biggest beneficiaries.