Jackson National Life Insurance Company® (Jackson®) generated $2.8 billion in IFRS pre-tax operating income during 2016, an increase of 7 percent over 2015 and the highest in company history. Jackson, an indirect wholly owned subsidiary of the United Kingdom’s Prudential plc (NYSE: PUK), recorded sales and deposits of $21.1 billion in 2016. The results mark another highly successful year for the company, despite recent challenges faced throughout the industry.
Barry Stowe, chairman and chief executive officer of the North American Business Unit of Prudential plc4, said the results were primarily driven by strong variable annuity net flows and the growth of separate account assets under management, which totaled a record $148.8 billion in 2016.
“At Jackson, our long-term, disciplined approach to business is centered on aligning the needs of our stakeholders,” Stowe said. “In 2016, this discipline enabled us to successfully manage volatile macroeconomic conditions and consistently drive positive outcomes amid adversity.”
“The products we provide are a crucial component of a well-balanced retirement plan,” Stowe continued. “The looming retirement crisis for under-saved Americans presents an opportunity for us to provide guaranteed income solutions that will support investors into and through retirement. As a leading provider of variable annuities, we’ll continue to focus our efforts on creating value for consumers and providing quality products that meet the needs of those in search of a viable retirement solution.”
Jackson continues to maintain its financial strength and capital position. The company increased total IFRS assets to $236.9 billion at the end of 2016, up 8 percent from year-end 2015. Jackson also increased regulatory adjusted capital to $5.3 billion, more than nine times the minimum regulatory requirement (as of December 31, 2016), while remitting a $550 million dividend to its parent company.
1Financial results from Jackson National Life Insurance Company and its subsidiaries have been included in Jackson’s financial results. Jackson results exclude its separately managed account business as new deposits have been discontinued effective July 31, 2015. Fixed index annuities, life insurance and institutional products are not sold in New York.
2International Financial Reporting Standards (IFRS) is a principles-based set of international accounting standards indicating how transactions and other events should be reported in financial statements. IFRS is issued by the International Accounting Standards Board in an effort to increase global comparability of financial statements and results. Jackson’s parent, Prudential plc (Group), uses IFRS to report the Group’s financial results.
IFRS pretax operating income is based on longer-term investment returns. It excludes short-term fluctuations in investment returns, hedge results and change in value of derivatives. A reconciliation to both IFRS net income as well as net income based on US generally accepted accounting principles (US GAAP) is as follows (amounts in millions):
|$||2,778.8||IFRS basis pretax income from operations|
|(2,321.5)||Net hedge results and change in value of derivatives, net of DAC amortization|
|332.5||Net realized investment gains, net of DAC amortization and non-controlling interest|
|(87.9)||Normalization of longer-term investment returns, net of DAC amortization|
|103.2||Income tax benefit|
|805.1||IFRS net income|
|(32.7)||IFRS to US GAAP adjustments, net of tax|
|$||772.4||US GAAP basis net income attributable to Jackson|
Jackson's net income was impacted by hedging losses incurred due to the equity market, which were not fully offset by the release of accounting reserves. IFRS accounting for variable annuity liabilities is not necessarily consistent with the economic value of these liabilities. Jackson continues to manage its hedge program on an economic basis and is willing to accept the accounting volatility that results.
3Jackson also has $223.1 billion of IFRS policy liabilities set aside to pay future policy owner benefits (as of December 31, 2016).
4The 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).
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 $236.9 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 $236.9 billion in total IFRS assets and $223.1 billion in IFRS policy liabilities set aside to pay primarily future policyowner benefits (as of December 31, 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 $740.6 billion in assets under management (as of December 31, 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.
Melissa Hernandez, Director, Corporate Communications