Jackson Increases IFRS Pretax Operating Income 26.7% To $701.0 Million

Jackson National Life Insurance Company ® (Jackson ®) generated record IFRS pretax operating income 1 of $701.0 million during the first half of 2012, an increase of 26.7 percent over the first half of 2011, due primarily to the success of its variable annuity product line and the resulting higher fee income. The company’s total first-half sales and deposits 2 were $12.6 billion, up 3.8 percent over the same period of the prior year.

“Jackson’s results in the first half clearly reflect our disciplined approach to the market and focus on value over volume,” said Mike Wells, Jackson’s president and chief executive officer. "Jackson remains committed to following its Long-Term Smart ® strategy to achieve sustainable and profitable growth."

Jackson, an indirect wholly owned subsidiary of the United Kingdom’s Prudential plc (NYSE: PUK), recorded IFRS net income of $378.5 million during the first half of 2012, compared to a six-month record of $392.2 million 3 during the first half of 2011. The decrease was due primarily to less favorable net hedge results during the period due to the rapid rise in equity markets, combined with accounting that does not fully reflect economic movements, as well as lower net realized gains, as compared to the first half of 2011.

As of June 30, 2012, Jackson had $4.1 billion of regulatory adjusted capital, more than eight times the regulatory requirements 4, after remitting a dividend of $400.0 million to its parent company. Jackson finished the first half of 2012 with $129.9 billion in total IFRS assets, 5 up from $118.8 billion 3 at December 31, 2011.

“Jackson’s pretax operating income benefited from fee income that was 19.6 percent higher than the first half of 2011 resulting in a new high water mark for a first half,” said Chad Myers, Jackson’s executive vice president and chief financial officer. “These operating results combined with strong capital formation show that Jackson’s approach to the VA market is sound and continues to lay the foundation for long-term success.”

Sales

During the first half of 2012, Jackson successfully launched a new variable annuity (VA) product, Elite Access SM, which helped the company generate a total of $9.6 billion in VA sales during the period—1.2 percent higher than the first half of 2011. Jackson’s sales of fixed and fixed index annuities (FIAs) increased during the first half of 2012, as competitive conditions became more favorable. Sales of traditional deferred fixed annuities rose 32.9 percent to $492.6 million, while FIA sales grew 18.3 percent to $793.5 million—both off of a relatively low base during the prior year.

"Jackson provides advisors with the products, tools and support they need to help clients achieve their financial goals despite record low interest rates and an uncertain equity market environment," said Clifford Jack, executive vice president and head of retail for Jackson. "We offer a wide range of quality investment options that give advisors the choice and freedom to implement an investment strategy that best suits their clients’ individual needs.”

Subsidiary and Affiliate Performance

Curian Capital ®, LLC (Curian ®), Jackson’s retail asset management subsidiary that provides innovative fee-based managed accounts and investment products, attracted $1.3 billion in deposits during the first half of 2012, resulting in record assets under management of $9.1 billion as of June 30, 2012, up from $7.3 billion at December 30, 2011. Curian’s IFRS net income for the first half of 2012 was $11.2 million, up from $7.6 million during the first half of 2011.

National Planning Holdings, Inc. (NPH), Jackson’s affiliated network of four independent broker-dealers, generated gross product sales of $8.2 billion during the first half of 2012, compared to $8.3 billion during the same period of 2011, and IFRS revenue of $411.5 million, up 1.6 percent over the prior year period. NPH also reported $8.1 million in IFRS net income, compared to $8.6 million during the first half of 2011.

Acquisition

In May 2012, Jackson announced it had entered into an agreement to purchase SRLC America Holding Corp. (SRLC) from Swiss Re. Jackson will pay $621.0 million in cash for the business, subject to purchase accounting adjustments to reflect the value of the business at closing. Swiss Re will retain a portion of the SRLC business through reinsurance arrangements to be undertaken prior to closing. The transaction is subject to regulatory approval and is expected to close in the third quarter of 2012.

Financial Strength

During the second quarter of 2012, subsequent to the above-mentioned acquisition announcement, all four primary rating agencies—A.M. Best, Standard & Poor’s, Fitch Ratings and Moody’s Investors Service, Inc.—affirmed Jackson’s financial strength ratings. Jackson has maintained the same financial strength ratings for more than nine years. As of July 31, 2012, Jackson had the following ratings: 6
  • A+ (superior) – A.M. Best financial strength rating, the second-highest of 16 rating categories
  • AA (very strong) – Standard & Poor's insurer financial strength rating, the third-highest of 21 rating categories
  • AA (very strong) – Fitch Ratings insurer financial strength rating, the third-highest of 19 rating categories
  • A1 (good) – Moody's Investors Service, Inc. insurance financial strength rating, the fifth-highest of 21 rating categories

Market Share

During the first quarter of 2012 (the latest industry data available), Jackson ranked:
  • Second in total annuity sales with a market share of 9.2 percent, up from third and a market share of 8.5 percent during the first quarter of 2011;7
  • Third in VA new sales with a market share of 12.3 percent, compared to third and a market share of 11.7 percent during the first quarter of 2011; 8
  • Seventh in total VA assets, up from 10th at March 31, 2011; 9
  • Seventh in FIA sales with a market share of 4.9 percent, up from eighth and a market share of 4.6 percent during the first quarter of 2011;10 and
  • Eighth in fixed-rate deferred annuity sales with a market share of 3.7 percent, up from 10th and a market share of 2.1 percent during the first quarter of 2011.11

“As in recent years, Jackson continues to benefit from the flight to quality in the retirement services industry as advisors and customers seek product providers that have demonstrated financial stability and a consistent approach to the market,” Wells said. “By conservatively balancing risk and returns, Jackson will be well-positioned to maintain the trust of its customers and distribution partners while continuing to deliver profitable growth to its parent company."

1 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, Prudential plc, 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 net income based on US generally accepted accounting principles (US GAAP) is as follows (amounts in millions):
$   701.0   IFRS basis pretax income from operations
(223.5 ) Net hedge results and change in value of derivatives, net of DAC amortization
(5.1 ) Net realized investment losses, net of DAC amortization and non-controlling interest
31.9 Normalization of longer-term investment returns, net of DAC amortization
(118.3 ) Income tax expense
    (7.5 )   Other
378.5 IFRS net income
    (13.6 ) IFRS to US GAAP adjustments, net of tax
$ 364.9 US GAAP basis net income

2 Sales and deposits from Jackson’s subsidiaries, Jackson National Life Insurance Company of New York ® and Curian, have been included in Jackson’s total and retail sales and deposits figures.

3 Prior year results were retrospectively restated as a result of the impact of the 2012 adoption of new accounting guidance requirements related to deferred acquisition costs.

4 Based on authorized control level capital requirements.

5 Jackson also has $119.0 billion of IFRS policy liabilities primarily set aside to pay future policyowner benefits (as of 6/30/12).

6 Financial strength ratings do not apply to the principal amount or investment performance of the separate account or underlying investments of variable products.

7 Sources: LIMRA U.S. Individual Annuities Sales Survey, 1st Quarter 2012. Jackson ranked second for total annuity sales out of 58 participating companies that provided LIMRA with quarterly data during 2012. LIMRA U.S. Individual Annuities Sales Survey 1 st Quarter 2011. Jackson ranked third for total annuity sales out of 59 participating companies that provided LIMRA with quarterly data during 2011.

8 Sources: © Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. Morningstar Annuity Research Center (MARC) First Quarter 2012 Sales Report © . Jackson ranked third in VA new sales out of 36 participating companies that provided MARC with quarterly data during 2012. MARC First Quarter 2011 Sales Report © . Jackson ranked third in VA new sales out of 39 participating companies that provided MARC with quarterly data during 2011.

9 Sources: © Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. MARC First Quarter 2012 Assets Report © . Jackson ranked seventh in VA assets (include fixed) out of 49 participating companies that provided MARC with quarterly data during 2012. MARC First Quarter 2011 Assets Report © . Jackson ranked 10 th in VA assets (include fixed) out of 50 participating companies that provided MARC with quarterly data during 2011.

10 Sources: Copyright © 2012, AnnuitySpecs.com. All rights reserved. AnnuitySpecs Indexed Sales & Market Report 1 st Quarter 2012. Jackson ranked seventh out of 38 companies that provided AnnuitySpecs with quarterly data during 2012. AnnuitySpecs Indexed Sales & Market Report 1 st Quarter 2011. Jackson ranked eighth out of 33 companies that provided AnnuitySpecs with quarterly data during 2011.

11 Sources: LIMRA U.S. Individual Annuities Sales Survey, 1st Quarter 2012. Jackson ranked eighth for fixed-rate deferred sales out of 57 participating companies that provided LIMRA with quarterly data during 2012. LIMRA U.S. Individual Annuities Sales Survey 1 st Quarter 2011. Jackson ranked 10 th in fixed-rate deferred sales out of 57 participating companies that provided LIMRA with quarterly data during 2011.

Before investing in variable products, investors should carefully consider the investment objectives, risks, charges and expenses of the variable product and its underlying investment options. The current contract prospectus and underlying fund prospectuses, which are contained in the same document, provide this and other important information. Please contact your representative or the Company to obtain the prospectuses. Please read the prospectuses carefully before investing or sending money.

About Jackson National Life Insurance Company

With $129.9 billion in assets (IFRS)*, Jackson National Life Insurance Company (Jackson) is a leading provider of retirement solutions. The company sells variable, fixed and fixed index annuities, and institutional products. Through its affiliates and subsidiaries, Jackson also provides asset management and retail brokerage services. Jackson markets its products in 49 states and the District of Columbia through independent and regional broker-dealers, wirehouses, financial institutions and independent insurance agents. Jackson’s subsidiary, Jackson National Life Insurance Company of New York ® , similarly markets products in the state of New York. For more information, visit www.jackson.com .

*Jackson has $129.9 billion in total IFRS assets and $119.0 billion in IFRS policy liabilities primarily set aside to pay future policyowner benefits (as of 6/30/12).

Annuities are issued by Jackson National Life Insurance Company (Home Office: Lansing, Michigan) and Jackson National Life Insurance Company of New York (Home Office: Purchase, New York). Variable annuities are distributed by Jackson National Life Distributors LLC. May not be available in all states and state variations may apply. These contracts have limitations and restrictions, including possible withdrawal charges, recapture charges and excess interest adjustments. Contact your representative or the Company for more information.

Please remember that a Jackson annuity is intended to be a long-term, tax-deferred vehicle for retirement. An annuity's earnings are taxable as ordinary income when withdrawn and, if taken before age 59 1/2, may be subject to a 10% additional tax. Variable annuities involve investment risks and may lose value.

Jackson National Life Insurance Company is an indirect subsidiary of Prudential plc, a company incorporated and with its principal place of business in the United Kingdom. Prudential plc and its affiliated companies constitute one of the world's leading financial services groups. It provides insurance and financial services directly and through its subsidiaries and affiliates throughout the world. It has been in existence for over 160 years and had $570 billion in assets under management as of June 30, 2012. 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.

The following cautionary statement is included to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by, or on behalf of, the Company. 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.

Copyright Business Wire 2010

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