Jackson National Life Insurance Company® (Jackson®) generated $1.3 billion in IFRS pretax operating income2 during the first half of 2016, up slightly over first half 2015. These results were primarily driven by fee income on record separate account assets under management of $138.9 billion, which continue to grow due to positive variable annuity net flows.
Jackson recorded sales and deposits of $11.2 billion in the first half of the year, down 14 percent from the same period in 2015, as reduced sales of variable annuities more than offset higher sales of fixed and fixed index annuities, as well as institutional products.
“Despite the headwinds we faced in the first half of 2016, Jackson experienced positive variable annuity net flows of $3.6 billion,” said Barry Stowe, chairman and chief executive officer of the North American Business Unit of Prudential plc3. “However, consistent with the rest of the industry, variable annuity sales have slowed due to market volatility and activity surrounding the U.S. Department of Labor fiduciary rule.”
“We will continue to offer quality products that meet the long-term needs of investors in search of a viable retirement solution,” Stowe said. “As the leading variable annuity provider in the industry, we are confident our business will continue to strengthen as the industry turmoil slows — we see this uncertainty as an opportunity to support our distribution partners and the financial advisors who work tirelessly to help Americans secure their financial futures.”
Jackson’s first half performance allowed the company to remit a $450 million dividend to its parent company while continuing to hold capital in excess of regulatory requirements. Additionally, Jackson’s financial health remains strong — the company’s financial strength ratings from independent rating agencies have remained unchanged for 13 years4. Jackson is an indirect wholly owned subsidiary of the United Kingdom’s Prudential plc (NYSE: PUK).
1Financial results from Jackson National Life Insurance Company and its subsidiaries have been included in Jackson’s financial results. Jackson results exclude Curian’s separately managed account business as new deposits have been discontinued effective July 31,2015. Fixed index annuities, life insurance and institutional products are not sold in New York.
2International Financial Reporting Standards (IFRS) is a principles-based set of international accounting standards indicating how transactions and other events should be reported in financial statements. IFRS is issued by the International Accounting Standards Board in an effort to increase global comparability of financial statements and results. Jackson’s parent, Prudential plc (Group), uses IFRS to report the Group’s financial results.
IFRS pretax operating income is based on longer-term investment returns. It excludes short-term fluctuations in investment returns, hedge results, and change in value of derivatives. A reconciliation to both IFRS net income as well as net income based on US generally accepted accounting principles (US GAAP) is as follows (amounts in millions):
|$||1,272.1||IFRS basis pretax income from operations|
|(1,944.9||)||Net hedge results and change in value of derivatives, net of DAC amortization|
|(126.4||)||Net realized investment losses, net of DAC amortization and non-controlling interest|
|(43.3||)||Normalization of longer-term investment returns, net of DAC amortization|
|396.9||Income tax benefit|
|(445.6||)||IFRS net loss|
|(20.2||)||IFRS to US GAAP adjustments, net of tax|
|$||(465.8||)||US GAAP basis net loss attributable to Jackson|
Jackson’s net income was also impacted by the increase in accounting reserves, primarily related to movements in interest rates, which were not fully offset by hedging gains. Accounting reserves are reported pursuant to the US GAAP measurement basis applied for IFRS, which may differ significantly from the fair value movement of the hedge instruments. Jackson continues to manage its hedge program on an economic basis and is willing to accept the accounting volatility that results.
3The North American Business Unit of Prudential plc includes Jackson, its subsidiaries Jackson National Life Distributors LLC (JNLD) and Jackson National Asset Management, LLC® (JNAM) and its U.S. affiliates National Planning Holdings®, Inc. (NPH) and PPM America, Inc. (PPMA).
4Ratings current as of June 30, 2016. Financial strength ratings do not apply to the principal amount or investment performance of the separate account or underlying investments of variable products.
About Jackson National Life Insurance Company
Jackson is a leading provider of retirement products for industry professionals and their clients. The company offers a diverse range of products including variable, fixed and fixed index annuities designed for tax-efficient accumulation and distribution of retirement income for retail customers, and fixed income products for institutional investors. Jackson subsidiaries and affiliates provide specialized asset management and retail brokerage services. With $230.4 billion in IFRS assets*, Jackson prides itself on product innovation, sound corporate risk management practices and strategic technology initiatives. Focused on thought leadership and education, the company develops proprietary research, industry insights and financial representative training on retirement planning and alternative investment strategies. Jackson is also dedicated to corporate social responsibility and supports charities focused on helping children and seniors in the communities where its employees live and work. For more information, visit www.jackson.com.
*Jackson has $230.4 billion in total IFRS assets and $216.5 billion in IFRS policy liabilities set aside to pay primarily future policyowner benefits (as of June 30, 2016). International Financial Reporting Standards (IFRS) is a principles-based set of international accounting standards for reporting financial information. IFRS is issued by the International Accounting Standards Board in an effort to increase global comparability of financial statements and results. IFRS is used by Jackson's parent company.
Jackson National Life Insurance Company is an indirect subsidiary of Prudential plc, a company incorporated in England and Wales. Prudential plc and its affiliated companies constitute one of the world's leading financial services groups. It provides insurance and financial services through its subsidiaries and affiliates throughout the world. It has been in existence for over 165 years and has $751.7 billion in assets under management (as of June 30, 2016). Prudential plc is not affiliated in any manner with Prudential Financial, Inc., a company whose principal place of business is in the United States of America.
This press release may contain certain statements that constitute “forward-looking statements.” Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements which are other than statements of historical facts. However, as with any projection or forecast, forward-looking statements are inherently susceptible to a number of risks and uncertainties and actual results and events could differ materially from those currently being anticipated as reflected in such forward-looking statements. There can be no assurance that management’s expectations, beliefs or projections will result or be achieved or accomplished. Any forward-looking statements reflect Jackson’s views and assumptions as of the date of this press release and Jackson disclaims any obligation to update forward-looking information.
PR2217 Rev. 08/16
Jackson National Life Insurance Company
Melissa Hernandez, External Communications Manager