Brookfield Reinsurance, which is buying the Argo Group for $1.1 billion, has reported a net loss of $93 million for the first quarter of the year (Q1 2022: $156 million).

Brookfield said the loss was driven largely by unrealised mark-to-market impacts on investments and insurance reserves, partially offset by the contribution of distributable operating earnings.

The company said it recognised $145 million of DOE for the three months ended March 31, compared to $13 million in the prior year period.

The increase was driven by contributions from American National, which it acquired at the end of May 2022, as well as higher net investment income from reinsurance treaties closed in late 2021, which have made significant progress over the last 12 months in redeploying assets into higher yielding investment strategies sourced through Brookfield and Oaktree.

Sachin Shah, chief executive officer of Brookfield Reinsurance, said: “Our results for the quarter were strong and reflect the significant growth of our business and investment portfolio redeployment activities over the past year.

“We continue to prioritise sourcing high value investment opportunities, whilst scaling the overall business. Our high levels of liquidity give us substantial flexibility in that regard.”

During the quarter, the company said, it increased gross asset returns to over five per cent, through $2 billion of investment deployment in the quarter, at returns in excess of eight per cent.

The return on equity for the quarter on Brookfield’s spread lending business totalled 17 per cent.

The company originated over $600 million of annuity premiums within its direct insurance segment, and added approximately $330 million of flow premiums to its reinsurance treaties, bringing total premiums reinsured to date under Brookfield’s reinsurance treaty with American Equity Life Insurance Company to over $6 billion.

Brookfield has closed more than 20 pension risk transfer transactions year to date, representing over $300 million of premiums, including $250 million of premiums within the US market, where the company has been active since closing its first PRT transaction last December.

The company said it has approximately $2 billion of corporate liquidity, with an additional $20 billion of cash and liquid assets within its insurance portfolios.

Brookfield’s merger agreement with Argo, announced in February, is expected to complete in the second half of 2023.