Jackson National Life Insurance Company® (Jackson®) generated a record $1.4 billion in IFRS pre-tax operating income during the first half of 2018, an increase of 0.8 percent over the first half of 2017. Jackson, an indirect wholly owned subsidiary of the United Kingdom’s Prudential plc (NYSE: PUK), recorded sales and deposits of $11.2 billion in the first half of the year, and remitted a $450 million dividend to its parent company. The results mark another successful six months for the company, reflecting its disciplined approach to business and strong capital position.
Barry Stowe, chief executive officer of Jackson Holdings LLC, said the results were primarily driven by the continued growth of separate account assets under management (totaling $179 billion as of June 30, 2018), due to positive net flows and rising equity markets.
“While our industry has faced its set of challenges in recent years, we are optimistic about the future,” Stowe said. “We will continue to work with the SEC toward a harmonized and uniform regulatory framework that puts consumers first and provides them with choice.”
On June 14, Jackson announced its role as a founding member and co-chair of the Alliance for Lifetime Income (Alliance), a 501(c)(6) organization formed and supported by 24 of the nation’s financial services organizations to create awareness and educate consumers and financial professionals about the importance of protected lifetime income. According to Stowe, Jackson helped to establish the Alliance because it believes it is critically important for the industry to work together to solve a significantly pressing social issue — millions of Americans are retiring every year without adequate financial security, and they are genuinely concerned about outliving their savings.
“What financial freedom really means is freedom from worry,” Stowe said. “Through the Alliance, we are partnering with policymakers, academia and consumer groups to address society’s looming retirement crisis. We are committed to educating Americans about the risks they face in retirement, and to helping them mitigate those risks with solutions that offer the opportunity to protect and grow their savings, while ensuring those savings last a lifetime.”
1Financial results from Jackson National Life Insurance Company and its subsidiaries have been included in Jackson’s financial results. Fixed index annuities 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):
|$||1,370.9||IFRS basis pre-tax income from operations|
|275.3||Net hedge results and change in value of derivatives, net of DAC amortization|
|73.7||Net realized investment gains, net of DAC amortization and non-controlling interest|
|(48.0||)||Normalization of longer-term investment returns, net of DAC amortization|
|(300.7||)||Income tax expense|
|1,371.2||IFRS net income|
|(20.5||)||IFRS to US GAAP adjustments, net of tax|
|$||1,350.7||US GAAP basis net income attributable to Jackson|
Jackson's net income benefitted from the release of accounting reserves, primarily due to interest rates, which were partially offset by hedging losses on equity and interest rate hedges. 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.
Jackson is a leading provider of retirement products for industry professionals and their clients. The company and its affiliates offer variable, fixed and fixed index annuities designed for tax-efficient growth and distribution of retirement income for retail customers, as well as products for institutional investors. Jackson is a proud founding member and co-chair of the Alliance for Lifetime Income, a nonprofit 501(c)(6) organization formed and supported by 24 of the nation’s financial services organizations to create awareness and educate Americans about the importance of protected lifetime income. With $264.9 billion in IFRS assets*, the company prides itself on product innovation, sound corporate risk management practices and strategic technology initiatives. Focused on thought leadership and education, Jackson develops proprietary research, industry insights and financial representative training on retirement planning and alternative investment strategies. The company 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 $264.9 billion in total IFRS assets and $251.6 billion in IFRS policy liabilities set aside to pay primarily future policyowner benefits (as of June 30, 2018). 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 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, serving over 26 million customers with $877.2 billion in assets under management (as of June 30, 2018). 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, Director, External Communications