Jackson National Life Insurance Company® (Jackson®) generated $2.9 billion in IFRS pre-tax operating income during 2017, an increase of 3 percent over 2016 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 $21.4 billion in 2017. 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 industry-leading positive net flows and the growth of separate account assets under management, which totaled a record $176.6 billion in 2017.
“As the American retirement wave picks up steam, the need for the products and education that Jackson provides has never been greater,” Stowe said. “We will continue to embrace our leadership position in the industry, particularly as we establish the footprint to change the narrative in the retirement marketplace. We are working harder than ever to ensure consumers understand the value of annuities that offer a lifetime income stream, as these products can serve as a foundational part of a comprehensive financial plan.”
Jackson continues to maintain its financial strength and capital position. The company increased total IFRS assets to $264.4 billion at the end of 2017, up 12 percent from year-end 2016. Jackson also reported regulatory adjusted capital of $4.3 billion, more than eight times the minimum regulatory requirement (as of December 31, 2017), while remitting a $600 million dividend to its parent company.
1Financial results from Jackson National Life Insurance Company and its subsidiaries have been included in Jackson’s financial results. Fixed index annuities, life insurance and institutional products are not sold in New York.
2International Financial Reporting Standards (IFRS) is a principles-based set of international accounting standards indicating how transactions and other events should be reported in financial statements. IFRS is issued by the International Accounting Standards Board in an effort to increase global comparability of financial statements and results. Jackson’s parent, Prudential plc (Group), uses IFRS to report the Group’s financial results.
IFRS pre-tax operating income is based on longer-term investment returns. It excludes short-term fluctuations in investment returns, hedge results and change in value of derivatives. A reconciliation to both IFRS net income as well as net income based on US generally accepted accounting principles (US GAAP) is as follows (amounts in millions):
|$||2,852.0||IFRS basis pre-tax income from operations|
|(1,967.7||)||Net hedge results and change in value of derivatives, net of DAC amortization|
|(28.6||)||Net realized investment losses, net of DAC amortization|
|(110.0||)||Normalization of longer-term investment returns, net of DAC amortization|
|(461.0||)||Income tax expense|
|284.7||IFRS net income|
|118.1||IFRS to US GAAP adjustments, net of tax|
|$||402.8||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 $250.0 billion of IFRS policy liabilities set aside to pay future policyowner benefits (as of December 31, 2017).
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 PPM America, Inc. (PPMA) and National Planning Holdings®, Inc. (NPH). On August 15, 2017, NPH announced the sale of the business of the four firms in its broker-dealer network to LPL Financial LLC (LPL).
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 $264.4 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 nonprofits focused on strengthening families and creating economic opportunities in the communities where its employees live and work. For more information, visit www.jackson.com.
*Jackson has $264.4 billion in total IFRS assets and $250.0 billion in IFRS policy liabilities set aside to pay primarily future policyowner benefits (as of December 31, 2017). 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 $905.4 billion in assets under management (as of December 31, 2017). 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.
Patrick Rich, Manager, Media Relations