Executive Summary / Key Takeaways

• Brookfield Corporation is strategically evolving into an investment-led insurance organization, leveraging its substantial balance sheet and growing insurance float to fund long-duration, low-risk real asset investments, aiming for enhanced capital efficiency and sustained shareholder returns.
• The company is at the forefront of global megatrends—digitalization, deglobalization, and decarbonization—with a particular focus on developing large-scale AI infrastructure ("AI factories") and renewable power solutions, exemplified by a landmark 3,000 MW hydroelectric agreement with Google (GOOGL).
• Financial performance remains robust, with Q2 2025 distributable earnings before realizations increasing 13% year-over-year to $1.3 billion, supported by strong asset management growth, scaling Wealth Solutions earnings, and significant monetization activity totaling $55 billion year-to-date in 2025.
• The Wealth Solutions business is rapidly expanding, with the recent agreement to acquire Just Group (JUST) in the U.K. expected to boost insurance assets by $40 billion towards a $200 billion target, and management projecting $25 billion in combined retail and institutional annuities for calendar year 2025.
• Brookfield maintains a strong liquidity position with a record $177 billion in deployable capital, enabling opportunistic share repurchases and strategic investments, while anticipating a significant step-up in carried interest realizations in 2026 and 2027 after a "bridge year" in 2025.

A Foundation in Real Assets, Evolving for the Future

Brookfield Corporation (NYSE:BN) stands as a global alternative asset manager with a rich history rooted in real estate, which later expanded to encompass pipelines and electricity transmission lines. This foundational expertise in tangible, essential assets has consistently driven its strategy, allowing the company to adapt and evolve with the shifting global economy. Today, Brookfield is strategically pivoting to become an investment-led insurance organization, a natural extension of its platform designed to enhance long-term shareholder value by leveraging its large-scale capital base to back low-risk, long-duration insurance liabilities. This evolution positions Brookfield at the nexus of capital provision and real asset development, a unique competitive stance in the alternative asset management landscape.

The company's overarching strategy is deeply intertwined with three accelerating global megatrends: digitalization, deglobalization, and decarbonization. These trends are not merely buzzwords for Brookfield; they are the bedrock of its investment pipeline and operational focus. For instance, the dramatic acceleration of global electricity demand, driven by the AI revolution and broader energy grid electrification, presents a tremendous investment opportunity for Brookfield's renewables and infrastructure platforms. This strategic alignment allows Brookfield to deploy its substantial capital into areas that are transforming the global economy, from renewable power generation to the physical infrastructure underpinning artificial intelligence.

In the competitive arena of alternative asset management, Brookfield distinguishes itself from peers like Blackstone Inc. (BX), BlackRock Inc. (BLK), and KKR & Co. Inc. (KKR) through its integrated approach to owning and operating real assets. While Blackstone excels in a broad range of private equity and credit, and BlackRock dominates passive investing with advanced technological platforms, Brookfield's strength lies in its hands-on operational expertise in infrastructure and renewable energy. This operational depth allows Brookfield to price risk more effectively and manage assets with a deeper understanding, potentially leading to superior, more stable returns in its specialized segments. Its global network and diversified asset portfolio also contribute to stronger customer loyalty and recurring revenue, providing a robust competitive moat.

Technological Edge: Powering the AI Revolution

Brookfield's technological differentiation is not in a proprietary software or chip, but rather in its unique, integrated capability to develop and operate large-scale, energy-first AI infrastructure. This involves the creation of "AI factories," which are extensive integrated sites combining power generation, data shells, and the necessary equipment to provide compute capacity to industry leaders, governments, and corporations. This effort draws on the strength of Brookfield's global operating teams in real estate, power, and infrastructure, each a global leader in its category.

The tangible benefits of this integrated approach are significant and quantifiable. For example, Brookfield recently signed a landmark agreement with Google to deliver up to 3,000 megawatts of hydroelectric capacity across the U.S.. This first-of-its-kind partnership includes initial 20-year power purchase agreements for 670 megawatts from two Pennsylvania hydropower plants, valued at over $3 billion. This demonstrates Brookfield's ability to provide scalable, carbon-free energy solutions, which are critical for the energy-intensive demands of AI data centers. The company's focus on renewables, where solar and wind are often the lowest-cost producers of power, offers a viable solution to meet accelerating global electricity demand. This strategic capability allows Brookfield to offer a comprehensive solution that few competitors can match, integrating the entire value chain from power generation to data center infrastructure.

Brookfield is also actively launching a dedicated AI infrastructure strategy, engaging with cornerstone investors, similar to how it launched its successful global transition fund. This strategy aims to limit downside risk by structuring investments through engagement with offtakers, effectively providing capital to fund the backbone infrastructure build-out. The company views AI as the next major investment trend, with AI-led advances in manufacturing following closely. This forward-looking technological roadmap, coupled with its operational expertise, enhances Brookfield's competitive moat, contributes to higher margins through integrated services, and solidifies its market positioning as a critical partner in the global digital transformation.

Financial Performance: A Story of Growth and Strategic Capital Deployment

Brookfield Corporation has consistently delivered strong financial results, reflecting its strategic execution and operational effectiveness. In the second quarter of 2025, distributable earnings (DE) before realizations increased by a robust 13% year-over-year to $1.3 billion, or $0.80 per share. For the last 12 months, DE before realizations stood at $5.3 billion, or $3.36 per share. This performance was underpinned by momentum across its core businesses and a significant pickup in transaction activity.

The Asset Management business, a key earnings driver, generated distributable earnings of $650 million ($0.41 per share) in Q2 2025, contributing $2.7 billion ($1.72 per share) over the last 12 months. Fee-bearing capital expanded to $563 billion, leading to fee-related earnings of $676 million, marking a 10% increase and 16% growth over the prior year quarter, respectively. This growth is fueled by strong fundraising, including $22 billion in inflows during Q2 2025, with over $5 billion from retail and Wealth Solutions clients. The company anticipates continued fundraising momentum into the second half of 2025, driven by final closes for its fifth vintage flagship opportunistic real estate strategy and its second vintage global transition strategy.

The Wealth Solutions business continues its rapid ascent, delivering distributable operating earnings of $391 million ($0.25 per share) in Q2 2025, and $1.6 billion ($1.02 per share) over the last 12 months. This segment benefits from robust investment performance and disciplined capital deployment, maintaining a return on equity (ROE) broadly in line with its long-term target of 15% plus. In Q2 2025, the business originated over $4 billion of retail and institutional annuities, bringing total insurance assets to $135 billion. Brookfield deployed $3.5 billion into Brookfield-managed strategies at an average net yield of 8%, with the overall investment portfolio generating an average yield of 5.8%, resulting in spread earnings 1.8% higher than the average cost of funds.

Operating businesses, encompassing real estate, renewable power and transition, infrastructure, and private equity, generated stable and growing cash flows, with distributable earnings of $350 million ($0.22 per share) in Q2 2025 and $1.7 billion ($1.07 per share) over the last 12 months. While the North American residential real estate business experienced softer conditions, most real estate operations performed well, showing strong same-store net operating income (NOI) growth across the core portfolio. Demand for high-quality office and retail space remains robust, with occupancy rates of 94% and 97%, respectively, in core assets.

Brookfield's monetization strategy has been highly effective, with $55 billion of asset sales completed year-to-date in 2025, including $35 billion in Q2 2025 alone. These sales generated excellent returns, with substantially all completed at or above carrying values. Notable divestitures in Q2 2025 included a student housing platform in Southern Europe for EUR 1.2 billion, a U.S. triple net lease platform for $2.2 billion, and the IPO of Leela Palaces in India, valuing the portfolio at $1.8 billion. Infrastructure sales included a remaining interest in a U.S. gas pipeline for $1.4 billion and a stake in PD Ports in the U.K. for approximately $1.3 billion. Energy asset sales totaled $7 billion, generating an aggregate 17% IRR. These monetizations not only return capital to investors but also move funds closer to carried interest realization, with $129 million of carried interest recognized into income in Q2 2025.

Strategic Expansion and Outlook

Brookfield's strategic initiatives are designed to capitalize on its core strengths and market opportunities. The Wealth Solutions business is a cornerstone of this strategy. Following its regulatory license to launch pension risk transfer (PRT) solutions in the U.K. in Q1 2025, Brookfield announced an agreement in Q2 2025 to acquire Just Group in the U.K., a leading U.K. provider of PRT solutions, for $3.2 billion. This acquisition is expected to grow Brookfield's insurance assets by approximately $40 billion, significantly accelerating its path towards $200 billion in insurance assets. Management anticipates the transaction will deliver a return on equity in line with the 15% plus long-term target for the overall business. The U.K. pension market alone is projected to see over $500 billion come to market in the next decade, presenting a substantial growth runway.

The company is also actively expanding its product offerings and distribution channels within Wealth Solutions, targeting larger bank channels in the U.S., which account for 60% of total U.S. retail annuity sales. Brookfield expects to write $25 billion of combined retail and institutional annuities for calendar year 2025, demonstrating aggressive growth targets. The inaugural $500 million issue of Funding Agreement-Backed Notes (FABN), an institutional annuity product, was three times oversubscribed in Q1 2025, highlighting strong market appetite for Brookfield's offerings.

Looking ahead, management expects continued growth in financial results for the remainder of 2025. While 2025 is anticipated to be a "bridge year" for carried interest realizations, broadly in line with 2024, a "significant step up" is projected for 2026 and 2027. This is due to Brookfield's conservative approach of recognizing carry only after the entire fund's invested capital and preferred returns have been returned to clients. The company's intrinsic value per share is estimated at approximately $100, with a long-term plan value per share of $102, and potential to reach $210 by 2030. Brookfield targets a 17% distributable earnings growth from its existing platform, with a headline growth target of 25% over a five-year period, driven by monetization activity and accretive cash reinvestment.

Risks and Competitive Dynamics

Despite a generally constructive macro environment, Brookfield faces several pertinent risks. Macroeconomic volatility, including potential policy changes and geopolitical events, can impact market stability and capital flows. However, Brookfield's business model, characterized by essential services, domestic operations across 30 countries, and largely contracted or regulated income streams, provides significant insulation against such external shocks.

In its Wealth Solutions business, while the focus is on low-risk liabilities, the P&C (Property & Casualty) segment presents specific considerations. Brookfield mitigates this by leveraging its deep operating expertise in underlying asset classes to price risk better, aiming for a combined ratio of less than 100. The company also takes steps to de-risk exposure, such as reinsurance in Florida, which minimized the impact of hurricane-related events in Q3 2024.

Technological obsolescence, particularly in the rapidly evolving AI infrastructure space, is a risk. Brookfield addresses this by structuring investments with offtakers to limit downside exposure and by focusing on providing the foundational backbone infrastructure rather than speculative, rapidly changing components.

From a competitive standpoint, Brookfield's specialized focus on real assets and integrated operational capabilities provides a distinct advantage over more generalized asset managers. While larger peers like BlackRock may have a lead in technological integration for broader asset management, Brookfield's targeted "AI factory" strategy and renewable power expertise offer a unique value proposition in the burgeoning digital infrastructure market. The company appears to lack proprietary, quantifiable technology differentiators. Its ability to source and execute large-scale, complex infrastructure deals, such as the Colonial Pipeline acquisition for approximately $9 billion, demonstrates its competitive edge in a capital-intensive sector. The U.K. pension risk transfer market, for instance, is described as needing competition, where Brookfield's established track record in North America positions it as a compelling new entrant.

Conclusion

Brookfield Corporation is executing a compelling investment thesis centered on its evolution into an investment-led insurance powerhouse, strategically positioned to capitalize on global megatrends. Its integrated approach to developing and operating real assets, particularly in AI infrastructure and renewable power, provides a unique technological and operational advantage in a rapidly transforming global economy. The robust financial performance, marked by strong distributable earnings growth and significant capital recycling, underscores the effectiveness of its disciplined capital allocation strategy.

With a clear roadmap for expanding its Wealth Solutions business, a substantial pipeline of deployable capital, and an anticipated acceleration in carried interest realizations, Brookfield is poised for continued intrinsic value growth. While macroeconomic uncertainties and competitive pressures persist, the company's foundational strengths, strategic adaptability, and commitment to long-term value creation through real assets and insurance float present a powerful narrative for discerning investors seeking exposure to the backbone of the global economy.